Formal and Informal Businesses Quiz

What is a formal business?

• Avoids keeping official records

• Operates without a fixed business address

• Does not follow any formal procedures to set up

• Has been registered legally and follows necessary procedures

Why do people trade in the informal sector?

• To avoid paying tax

• To employ a large number of people

• To follow formal procedures

• To find employment in the formal sector

What is a characteristic of formal trading businesses?

• Sell directly to the consumer

• Operate without official records

• Sell from market stalls

• Avoid paying tax

What do manufacturing businesses do?

• Operate from home

• Sell products made by other businesses

• Provide services and charge a fee

• Turn raw materials into finished products

Where do informal service businesses often operate from?

• Business premises

• Well-equipped factories

• Home or temporary structures

• Market stalls

What type of businesses sell their skills and time to other businesses or people?

• Trading businesses

• Retailers

• Manufacturing businesses

• Service businesses

What is a common reason why people start informal businesses?

• To have a recognised business address

• To avoid paying tax

• To employ a large number of skilled workers

• To use advanced technology in production

Which sector is more likely to have employees with high levels of skills and training?

• Trading businesses

• Manufacturing businesses

• Informal sector

• Formal sector

What is a characteristic of informal businesses?

• Easy to start up and not registered

• Operate from recognised business premises

• Registered with SARS

• Keep official records

What do formal manufacturing businesses usually operate from?

• Temporary structures

• Home

• Market stalls

• Well-equipped factories